Kyobo Securities on the 27th said it views positively NAVER(035420) partnering with Nvidia to push a joint project to build a global artificial intelligence (AI) factory. It maintained a "Buy" rating and a target price of 390,000 won. NAVER's previous closing price was 207,500 won.
Kim Dong-u, an analyst at Kyobo Securities, said the AI factory business, one of the new businesses through collaboration with Nvidia, "means a full-fledged entry into a capital-intensive, business-to-business (B2B)-oriented model."
NAVER had originally been reluctant to aggressively secure capacity for external-facing data centers, but as AI computing demand in Asia, including Korea, became evident, it launched the AI factory business.
Kim said, "It appears the plan is to establish a joint venture and a special purpose vehicle (SPV) based on capital from NAVER and strategic partners, then raise funds through financing."
NAVER plans to begin securing 200 MW of data center capacity through leases from 2027 to 2028 and secure about 1 GW over five to six years, ultimately setting a long-term goal of 20 trillion won in annual revenue from the AI factory business with a 20% operating profit margin (OPM).
Kim said, "The 200 MW data center to be secured through leases is already under discussion with a major global client," adding, "Additional capacity is expected to come through proprietary data centers, additional leases, and expansions in new global regions."
Accordingly, it was added that AI factory revenue contributions are estimated at 475 billion won in 2027 and 2.5 trillion won in 2028.
Kim said, "As the business is at an initial stage, there is some uncertainty in capital-raising methods, specific contract structures, and timing, but AI computing demand is rising," and explained, "Based on its technology providing full-stack cloud services from infrastructure to services, we view positively the strategic direction to ramp up the external B2B enterprise business."